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Thursday, September 15, 2011

In public

Apparently, the Dutch Parliament has given the country's Finance Minister Jan Kees de Jager until Friday to outline possible scenarios for how to deal with Greece, including the impact on the Netherlands should the Greek government default on its debt.

This comes hot on the heels of leaksin the Dutch media, claiming that the Dutch Finance Ministry now considers a Greek default "unavoidable". According to the leaked documents, the Dutch government is now instead planning for how to manage a Greek default in an orderly manner. The reports were immediately denied by the Finance Ministry). The other night, Dutch TV programme Nieuwsuur (the Dutch equivalent to BBC Newsnight) featured an interview with de Jager (picture), who said (our emphasis):

"as Finance Minister I need to assume in public that Greece is complying with its obligations, but for us it is important that we continue to insist that Greece sticks to the agreement and if they don't, then we'll have to indicate that we cannot contribute our share."

As the reported highlighted, note the use of "in public" (suggesting that "in private" he thinks otherwise). Hardly an earth-shattering revelation given the state of the Greek economy, but still interesting to see him being so candid about it. He also seamed to suggest that leaks of this kind could serve to put additional pressure on Greece.

A the risk of a Greek default, he said:

"There is indeed a large risk, and it can be that Greece forces us to do that. However, this kind of pressure can push Greece to take yet another step. And that's what we're assuming for now."

1 comment:

Agincourt
said...

Delicate diplomatic language may perhaps have had some relevance at the very earliest stages of Greece's crisis 2 - 3 years ago. But now it's time for plain speaking, & the Dutch Finance Minister does himself no good, nor Greece, nor the Netherlands, by pussy-footing around.

If someone like the straight-talking "Hockey Mom/Momma Grizly" Sarah Palin had been speaking, she would have come right out with the truth. Ie: all Greece's efforts to hang on by its finger-tips to euro-membership is a complete waste of time. Instead, Greece should be borrowing from the IMF (& perhaps also the EU) sufficient to tide it over the initial few months of a return to the drachma until a cheap drachma enables the near-bankrupt country to earn enough to start repaying interest on those parts of its current debts that it decides not to default on. Indeed, by now it would be wise to limit that to only about 30% of its current sovereign debts. In other words a 70% default, reducing its payable debts down to about 50% of current GNP, rather than the currently expected figure of a totally un-repayable 172%, which Greece's debts are expected to reach by the end of this year.

And the rest of the euro countries? She would tell them they need to hastily re-capitalize their banks up to at least 10% of their current liabilities, & make emergency arrangements for more emergency funds if need be. All that all this currently evasive diplomatic talk is achieving is delaying the inevitable so that when the crunch actually comes (probably in the next few weeks to months) it will be even worse!